In Retail Medicine, Opportunity for Market Share Growth

, February 17, 2014

As patient volumes shift from inpatient to outpatient settings, some hospitals and health systems are entering the retail medicine space in new ways.


When CVS Caremark announced on Feb. 5 that it will stop selling cigarettes and other tobacco products in its 7,600 U.S. stores by Oct. 1, 2014, it was a clear indication to anyone in healthcare—or who covers the healthcare finance beat—that the company is banking its future in large part on its retail medicine strategy.

"Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health," said president and CEO Larry J. Merlo in a press release. "Put simply, the sale of tobacco products is inconsistent with our purpose."

Since 2000, when it opened its first MinuteClinic where nurse practitioners and physicians' assistants provide treatments for basic illnesses and injuries, part of CVS Caremark's purpose has been to meet patient demand for same-day care and more convenient hours. The business model appears to be working: There are now more than 800 MinuteClinic locations in 28 states and Washington, D.C., and MinuteClinic's services have expanded to include chronic disease management.

According to the press release, CVS Caremark expects to lose about $1.5 billion in annual tobacco sales, as well as about $500 million in related sales. Although these are big numbers, the company obviously believes it can generate even more revenue by growing its primary care market share through its retail clinics.


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